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Immigrant Specificity and the Relationship between Trade and Immigration: Theory and Evidence

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  • Harry P. Bowen

    ()
    (McColl School of Business, Queens University Charlotte, 1900 Selwyn Avenue, Charlotte, NC 28274, USA; corresponding author)

  • Jennifer Pédussel Wu

    ()
    (Berlin School of Economics and Law–HWR, Badensche Straße 52, D-10825 Berlin, Germany;)

Abstract

Studies routinely document that immigrant employment concentrates in non-traded goods sectors and that many immigrants have low inter-sectoral mobility. We consider these observed characteristics of immigrant employment with regard to the question of how immigration affects a nation's pattern of production and trade. We model an economy producing three goods; one is non-traded. Domestic labor and capital are domestically mobile but internationally immobile. Allowing that some new immigrants will become specific to the non-traded goods sector, the model indicates that the effects of immigration on output and trade depend importantly on the sectoral pattern of employment of both new and existing immigrants. Empirical investigation in a panel data set of OECD countries supports the model's prediction that immigration raises the output of non-traded goods. Consistent with the model, we also find that immigration and trade are complements. Given its empirical support, the model's implications for immigration policy are then discussed.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 80 (2013)
Issue (Month): 2 (October)
Pages: 366-384

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Handle: RePEc:sej:ancoec:v:80:2:y:2013:p:366-384

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Cited by:
  1. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2011. "The impact of immigration on international trade: a meta-analysis," Norface Discussion Paper Series 2011020, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Fariastuti Djafar & Mohd Khairul Hisyam Hassan, 2013. "Does Trade With Labour Sending Countries Reduce Demand for Migrant Workers: A Lesson from Malaysia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(10), pages 1325-1336, October.

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